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Time Warner eyeing IPC magazine group

Time Warner Inc. confirmed Monday it will take a look at the IPC consumer magazine group that will be auctioned shortly by Reed Elsevier, but people close to TW played down the extent of its interest.

Friday’s Financial Times quoted Time Inc. editor-in-chief Norman Pearlstine as saying Time is “very interested” in participating in the auction and would examine the IPC titles “quite aggressively.” Pearlstine did not return calls but a spokesman for Time Warner said the company did not dispute the reported statements.

The acquisition would cost well over $1 billion, however, and would be at odds with Time Warner chairman Gerald Levin’s recent statements that the company is “strategically complete” and plans to focus on paying down debt and buying back stock.

May want some titles

People close to the company said that while Time Inc. would look at the IPC magazines, it is unlikely to make such a big acquisition. Sources said Time Inc. would not want to buy all 71 titles in the IPC group, but it may be interested in picking up some of the titles.

IPC publishes such titles as Woman’s Own, Woman’s Weekly and New Scientist. Its magazines are highly profitable, earning a reported $105 million on revenue of $527 million.

Reed Elsevier is parent company to other trade publications, including Variety and Daily Variety.

Time Warner’s stock price has rallied in recent months as investors showed their approval of Levin’s promises on the debt and stock buybacks, but bidding in an expensive auction might cause some concerns among investors. TW closed up $1.56 to $59.81 Monday

Investor concern

PaineWebber Inc. analyst Christopher Dixon said investors’ reaction to any such deal would depend upon the price.

Dixon said he hopes that Time Warner fulfills its promise to reduce its debt and buy back shares to “shrink its capital base … but there will come a time when the capital base has reached an optimism structure and we may be very close to that. At that point, the company will take a hard look at a whole variety of strategic opportunities.”

Buying international magazines would be useful in extending Time Inc.’s brand overseas, Dixon added. He noted that Time Warner could afford to pay more than some buyers because it could integrate IPC into its existing Time Inc. structure and cut costs.

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